Another month has flown by, and another month I was very active…maybe too active…in “managing my portfolio.” I do truly think of it as managing, not trading. I don’t buy or short to make a quick profit and then close the position. That’s trading. I buy with the intention to hold good companies. It just seems like I may be changing my mind a little too much – something I’ll continue to monitor. I may need to enforce a longer time period for due diligence before I allow myself to buy stocks of new companies. We’ll see as the journey continues.
That said, my 3 large positions remain – although a 4th has joined the mix. In order, we have: SKX, LGIH, FIT, and SEDG.
I’m down to just 3 medium positions: PN, PERI, and XPO.
I’ve actually got 12 small positions now (up from 11), but they have changed considerably. I’ll discuss below. Current list is: SUNW, MITK, RUBI, DY, LC, INFN, INBK, STMP, AMZN, PAYC, CBM, GDEN.
I’ve got about 3.5% in cash.
If you did the math, I’m actually down from 21 positions to 19. Very happy with that. They’re also a little more spread out, with fewer medium positions and more small ones. The two biggest, esp SKX, have gotten REALLY big.
Previous Month Summaries
January: I didn’t start doing this until February
May was a difficult month, and largely because of quarterly reports. Many were exactly what I had hoped for or better, but did not please the markets. Hopefully I will eventually be proven right that these companies (I’m looking at you FIT) will continue to grow and become more and more valuable, which will eventually be reflected in the stock price. But for now, results are not good.
It’s not hard to see why my portfolio is down in May. All of my top 3 at the end of April are down (SKX, LGIH, and FIT), and several others are as well.
At the end of April I was down 4.56% for the year. After May I’m down 10.60%. I was down as much as 16% at my worst (May 19th).
The S&P was up 1.05% YTD at the end of April. After May it is up 2.6% on the year.
Changes this month, and why I made them
Here’s a quick rundown of stuff I sold out of:
TPLM - This was a speculative play, and they’re probably going bankrupt.
ERI - Took profits – not a company I really want to follow, and they seem expensive.
GBX - Stagnant – possible value bet, but too unclear. Kind of like AHGP, which I liquidated in April.
SSW - Not something I understand well or want to follow.
INVN - Tiny position that I never should have started. Haven’t even done much research on the company.
CYBR - Just seems so expensive…I don’t really understand it and it seems like a story stock.
SCMP - Really not in my wheelhouse. It was a try out position and I just didn’t get into it.
HRTG - We discussed at length on the board and decided they have a really risky niche.
SWKS - Just not for me. The company doesn’t seem to expect a lot of growth any time soon. Maybe that’s a good thing – if the expectations change favorably (say on their next quarterly CC), the stock could be in for a jolt upward. I just don’t know.
Here are the new companies I’ve added:
SUNW - I’m excited by alternative energy. This company is dirt cheap and growing like a weed. Lots of risk/volatility as it is TINY!
MITK - One of Saul’s. I didn’t get in until $8/share or so, and it’s not cheap, but what a great niche. I just couldn’t resist any longer.
RUBI - Saul introduced this and I must say it sounds like a great opportunity.
STMP - Growing like a weed and very cheap (because of a SA short attack, methinks)
AMZN - Well it’s time for everyone to say a big “I told you so” to me. I do really have to ignore my bias toward smaller stuff in regards to this one…but I have finally stopped lumping it in with the likes of NFLX. The growth is just phenomenal, and they may be at a sort of inflection point where they stop looking so expensive.
PAYC - Sort of trying this one out. One of a few I’ve been looking at, and pulled the trigger.
CBM - Don’t really get this one, but like RUBI, they seem to be sandbagging a bit on guidance, which probably bodes well for future beats.
I’ve added to SKX and LGIH as these continue to be my two highest conviction positions. It doesn’t hurt that they are two of Saul’s top 3 as well. They grow every quarter, and the stocks have remained so inexpensive. Just opportunities I want to load up on.
I trimmed INFN. I hated to sell at the low, but wanted to buy other things. Plus, they really do need to show some earnings eventually.
I also trimmed FIT (after initially adding to it after earnings). It’s still very cheap and will remain a large position for me, but there are risks and I anticipate volatility. Just being cautious.
SEDG got clobbered after earnings, which were exactly what I expected, and the outlook is good, although clearly not as perfect as the market wanted. Here’s the thing: this isn’t a stock that’s priced for perfection. Even after it’s recovered quite a bit, the PE is below 15!
I trimmed INBK because I really don’t understand what’s going on. They increased share count by about 20% (which I guess was planned although I had missed it) and the stock went up. Seemed like a good place to take profits and reduce exposure.
I added back to PN when shares hit $7.50 or so. I know there are a lot of risks but this is incredibly cheap. PE is ~9 or something.
I added to LC – it’s gotten destroyed because the ex-CEO did some shady stuff. I realize that it’s a big risk-ball right now and I’m still keeping my position small, but I did want to “be greedy when others are fearful.” Maybe this isn’t the place to do that, which is why I’m being cautious with my position size. Please note that this is probably my #1 most volatile position.
My Current Allocations
Skechers USA 19.6% LGI Homes 13.8% Fitbit 8.4% Solaredge 8.4% Patriot National 6.6% Perion 4.5% XPO Logistics 4.1% Sunworks 3.2% Mitek Systems 3.2% The Rubicon Project 3.1% LendingClub 3.0% Dycom 3.0% Infinera 2.7% First Internet Bank 2.7% [Stamps.com](http://Stamps.com) 2.5% Amazon 2.5% Paycom 2.1% Cambrex 1.8% Golden Entertainment 1.3% CASH 3.5%
Random Thoughts and Conclusions
My random thought is that while SEDG getting destroyed after earnings was one of the big negatives for me this month, adding to it considerably while it was down and its subsequent comeback has been one of the biggest positives. Same with the comeback of the decimated INFN, though unfortunately I had trimmed it rather than added to it. Good reminder of just how short term the market can be. Those companies got beaten down for different reasons, but both it seems were beaten down too far. Since their lows, they are two of my best performers.
There are many lessons to take from this so I won’t try to draw a single conclusion.
I wish you all the best in June!